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Testable Implications (testable + implication)
Selected AbstractsNoncontractible Heterogeneity in Directed SearchECONOMETRICA, Issue 4 2010Michael Peters This paper provides a directed search model designed to explain the residual part of wage variation left over after the impact of education and other observable worker characteristics have been removed. Workers have private information about their characteristics at the time they apply for jobs. Firms value these characteristics differently and can observe them once workers apply. They hire the worker they most prefer. However, the characteristics are not contractible, so firms cannot condition their wages on them. This paper shows how to extend arguments from directed search to handle this, allowing for arbitrary distributions of worker and firm types. The model is used to provide a functional relationship that ties together the wage distribution and the wage,duration function. This relationship provides a testable implication of the model. This relationship suggests a common property of wage distributions that guarantees that workers who leave unemployment at the highest wages also have the shortest unemployment duration. This is in strict contrast to the usual (and somewhat implausible) directed search story in which high wages are always accompanied by higher probability of unemployment. [source] THE TIMING OF SIGNALING: TO STUDY IN HIGH SCHOOL OR IN COLLEGE?,INTERNATIONAL ECONOMIC REVIEW, Issue 3 2007Sanghoon Lee American students study harder in college than in high school, whereas East Asian students study harder in high school than in college. This article proposes a signaling explanation. Signaling may occur over time both in high school and in college, and societies may differ in the timing of signaling. Students work harder in the signaling stage determined by the society as a whole. A testable implication is that high ability workers in East Asia are more concentrated among a few colleges than their U.S. counterparts. This implication is confirmed by top CEO education profile data in the United States and Korea. [source] Is Child Work Necessary?,OXFORD BULLETIN OF ECONOMICS & STATISTICS, Issue 1 2007Sonia Bhalotra Abstract This article investigates the hypothesis that child labour is compelled by poverty. It shows that a testable implication of this hypothesis is that the wage elasticity of child labour supply is negative. Using a large household survey for rural Pakistan, labour supply models for boys and girls in wage work are estimated. Conditioning on non-labour income and a range of demographic variables, the article finds a negative wage elasticity for boys and an elasticity that is insignificantly different from zero for girls. Thus, while boys appear to work on account of poverty compulsions, the evidence for girls is ambiguous. [source] Demand for cash balances in a cashless economyINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 3 2009Richard Dusansky D11; D91; E41 We study the demand for cash balances in the year 2050, when people exclusively use debit cards for all transactions. Money no longer serves as a medium of exchange. However, money still retains its roles as unit of account, numeraire and store of value. We capture these roles in a multi-period model with intertemporal uncertainty regarding prices and the interest rate on bonds, the alternative asset. A key result of our analysis is that the standard negative relationship between money demand and the bond interest rate is seen to be part of a larger economic reality encompassing a broader range of empirically testable implications, including the possibility that the relationship may be positive. We develop formal structural restrictions under which the positive relationship between cash balance demand and the bond interest rate is not only a possible outcome, but an explicit prediction of the model. [source] Never on Sunny Days: Lessons from Weekly Attendance CountsJOURNAL FOR THE SCIENTIFIC STUDY OF RELIGION, Issue 2 2004Laurence R. Iannaccone Congregational attendance data are abundant, accessible, and relevant for religious research. Weekly attendance histories provide information about worshippers, congregations, and denominations that surveys cannot capture. The histories yield novel measures of commitment, testable implications of rational choice theory, and compelling evidence that attendance responds strongly to changes in the opportunity cost of time. [source] Vertical price leadership: A cointegration analysisAGRIBUSINESS : AN INTERNATIONAL JOURNAL, Issue 3 2002W. Erno Kuiper Here we detail a method to test whether or not retailers allow suppliers to set the wholesale price not only on the basis of the costs faced by the suppliers but also on the basis of consumer demand. Using standard theory, long-run price relationships between the stages in the channel are derived. Next, these static price relationships are imposed on a dynamic model to be tested for cointegration and long-run noncausality, embedding the hypotheses on vertical price leadership. To derive the testable implications of these hypotheses, we show that the common stochastic trend and long-run equilibrium error must explicitly be assigned to variables in the channel model. The model is particularly relevant for industries characterized by a low degree of product differentiation. An empirical application to two Dutch marketing channels for food products gives comprehensible results. [EconLit citations: C32, L12, Q11] © 2002 Wiley Periodicals, Inc. [source] The Determinants of Contract Length in Temporary Help EmploymentLABOUR, Issue 3 2006Tommaso Nannicini A simple theoretical model is developed, in order to depict the choice of contract length made by a firm that recruits temporary agency workers to deal with activity peaks. Assuming that the hiring of a new worker is associated with selection and training costs, longer contracts have an option value in face of a greater persistence of positive shocks. The model has two testable implications. First, the degree of serial correlation in market demand positively affects contract length. Second, the shortage of alternative employment opportunities negatively affects contract length. Using data on Italian temporary agency workers, both implications are confirmed by the econometric analysis. [source] Asymmetric information in insurance: general testable implicationsTHE RAND JOURNAL OF ECONOMICS, Issue 4 2006Pierre-André Chiappori Several recent articles on empirical contract theory and insurance have tested for a positive correlation between coverage and ex post risk, as predicted by standard models of pure adverse selection or pure moral hazard. We show here that the positive correlationproperty can be extended to general setups: competitive insurance markets and cases where risk aversion is public. We test our results on a French dataset. Our tests confirm that the estimated correlation is positive; they also suggest the presence of market power. [source] | ||||||||||||||||||||||